Mid Continent Steel & Wire, Inc. v. United States

• Decision Date: 23 March 2017
• Docket Number: Court No. 15–00213,Slip Op. 17–31
• Citation: 219 F.Supp.3d 1326
• Parties: MID CONTINENT STEEL & WIRE, INC., et al., Plaintiff and Consolidated Plaintiffs, v. UNITED STATES, Defendant, and PT Enterprise Inc., et al., Defendant–Intervenors and Consolidated Defendant–Intervenor.
• Court: U.S. Court of International Trade

219 F.Supp.3d 1326

MID CONTINENT STEEL & WIRE, INC., et al., Plaintiff and Consolidated Plaintiffs,

v. UNITED STATES, Defendant,andPT Enterprise Inc., et al., Defendant–Intervenors and Consolidated Defendant–Intervenor.

Slip Op. 17–31

Court No. 15–00213

United States Court of International Trade.

March 23, 2017

Adam Henry Gordon and Ping Gong , The Bristol Group PLLC of Washington, DC, argued for Plaintiff and Defendant–Intervenor Mid Continent Steel & Wire, Inc.

Andrew Thomas Schutz , Max F. Schutzman , and Ned Herman Marshak , Grunfeld Desiderio Lebowitz Silverman & Klestadt LLP of Washington, DC, and New York, NY, argued for Consolidated Plaintiffs and Defendant–Intervenors PT Enterprise Inc., Pro–Team Coil Nail Enterprise Inc., Unicatch Industrial Co., Ltd., WTA International Co., Ltd., Zon Mon Co., Ltd., Hor Liang Industrial Corporation, President Industrial Inc., Liang Chyuan Industrial Co., Ltd. With them on the brief was Bruce M. Mitchell .

Mikki Cottet , Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Benjamin C. Mizer , Principal Deputy Attorney General, Jeanne E. Davidson , Director, and Patricia M. McCarthy , Assistant Director. Of counsel on the brief was Zachary Scott Simmons , Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce of Washington, DC.

AMENDED OPINION

Kelly, Judge:

This consolidated action comes before the court on motions for judgment on the agency record pursuant to USCIT Rule 56.2. Rule 56.2 Mot. for J. Agency R. Pl. Mid Continent Steel & Wire, Inc., Feb. 26, 2016, ECF No. 28 ("Mid Continent Mot."); PT Pls.' Rule 56.2 Mot. J. Agency R., Feb. 26, 2016, ECF No. 30 ("PT Mot."). Plaintiff Mid Continent Steel & Wire, Inc. ("Mid Continent") and Consolidated Plaintiffs PT Enterprise Inc. et al. ("PT") challenge various aspects of the Department of Commerce's ("Department" or "Commerce") final determination in the antidumping duty ("ADD") investigation of imports of certain steel nails from Taiwan for the period April 1, 2013 through March 31, 2014. Br. Support Rule 56.2 Mot. J. Agency R. Pl. Mid Continent Steel & Wire, Inc. Confidential Version 17–42, Feb. 26, 2016, ECF No. 27–1 ("Mid Continent Br."); Br. Support Pls.' Rule 56.2 Mot. J. Agency R. Confidential Version 8–45, Feb. 26, 2016, ECF No. 29 ("PT Br."); see Certain Steel Nails from Taiwan: Final Determination of Sales at Less Than Fair Value , 80 Fed. Reg. 28,959 (Dep't Commerce May 20, 2015) (final determination of sales at less than fair value) ("Final Results "); Certain Steel Nails From the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, and the Socialist Republic of Vietnam: Antidumping Duty Orders , 80 Fed. Reg. 39,994 (July 13, 2015) ("Order ").

Mid Continent commenced this action pursuant to section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a (2012).¹ Summons, Aug. 8, 2015, ECF No. 1; see Compl., Sept. 4, 2015, ECF No. 9. Mid Continent challenges Commerce's determination that PT's affiliated producer Pro–Team Coil Nail Enterprise Inc. ("Pro–Team") is not affiliated with [[ ]] of the [[ ]] tolling companies that do production activities for Pro–Team.² Mid Continent Br. 17–41. PT challenges: (1) several aspects of Commerce's application of its differential pricing analysis as unreasonable and contrary to law, PT Br. 8–35; (2) Commerce's treatment of Pro–Team's costs/expenses relating to production/sales of steam as not supported by substantial evidence, id. at 35–42; and (3) Commerce's decision to adjust transfer prices paid for wire drawing and nail making to reflect market prices as not supported by substantial evidence, id. at 42–44.

Defendant, United States ("Defendant"), responds that the court should deny the motions of Mid Continent and PT and sustain Commerce's Final Results in full. See Def.'s Resp. Opp'n Pls.' Rule 56.2 Mots. J. Agency R. Confidential Version 9–54, Aug. 3, 2016, ECF No. 47 ("Def.'s Resp."). Mid Continent filed a response, as defendant-intervenor, in opposition to PT's motion, see Resp. Br. Mid Continent Steel & Wire, Inc. Opp'n PT Enterprise Inc. et al.'s R. 56.2 Mot. J. Agency R. Confidential Version, Aug. 3, 2016, ECF No. 42 ("Mid Continent Resp. Br."), and PT filed a response, as defendant-intervenors, in opposition to Mid Continent's motion. See Def.–Intervenors' Resp. Br. Opp'n Pl.'s Mot. J. Agency R. Confidential Version, Aug. 3, 2016, ECF No. 48 ("PT Resp. Br.").

For the reasons that follow, Commerce's final results are sustained in part and remanded in part. Specifically, the court sustains Commerce's determinations: (1) that Pro–Team is unaffiliated with the [[ ]] tollers in question; (2) to use the Cohen's d test within the differential pricing analysis to determine the existence of a pattern of significant price differences; (3) to use a simple average to calculate the pooled standard deviation in the Cohen's d test of the differential pricing analysis; (4) to not offset dumped sales with non-dumped sales in calculating the respondent's antidumping duty margin using the average-to-transaction methodology; and (5) to disregard transfer prices paid by Pro–Team to certain affiliated tollers in its calculation of normal value ("NV"). The court remands Commerce's allocation of expenses associated with Pro–Team's separate steam line of business for further explanation and consideration consistent with this opinion.

BACKGROUND

On June 25, 2014, in response to a petition filed by Mid Continent, Commerce initiated an antidumping duty ("ADD") investigation of certain steel nails from six countries, including Taiwan. See Certain Steel Nails from India, the Republic of Korea, Malaysia, the Sultanate of Oman, Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam: Initiation of Less–Than–Fair–Value Investigations , 79 Fed. Reg. 36,019 (June 25, 2014) (notice of initiation of ADD investigations). Commerce selected Taiwanese exporters PT and its affiliated producer, Pro–Team, and Quick Advance, Inc. and its affiliated producer, Ko's Nails Inc., as mandatory respondents for the investigation. See Certain Steel Nails from Taiwan: Negative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination , 79 Fed. Reg. 78,053, 78,054 (Dep't Commerce Dec. 29, 2014) (preliminary determination of sales at less than fair value, postponement of final determination) ("Prelim. Results "); Decision Memorandum for the Preliminary Determination in the Antidumping Duty Investigation of Certain Steel Nails from Taiwan at 2, PD 225, bar code 3247845–01 (Dec. 17, 2014) ("Prelim. Decision Memo");³ see 19 U.S.C. § 1677f–1(c)(2)(B).

On December 29, 2014, Commerce issued its negative preliminary determination. See Prelim. Results , 79 Fed. Reg. at 78,053 ; Prelim. Decision Memo at 1. Commerce applied the differential pricing analysis and determined that, although 41.73% of PT's sales passed the Cohen's d test, a meaningful difference did not exist in the dumping margins that would result using the standard A-to-A methodology and the alternate mixed methodology. Id. at 12. Commerce accordingly applied the standard average-to-average ("A-to-A") methodology to all of PT's sales, id. , and preliminarily determined that respondents' steel nails from Taiwan "are not being, or are not likely to be, sold in the United States at less than fair value." Id. at 1. Commerce preliminarily assigned PT a weighted-average dumping margin of 0.00%. Prelim. Results , 79 Fed. Reg. at 78,054. Commerce found that PT used certain affiliated tollers to produce its steel nails and accordingly Commerce adjusted the transfer prices paid for wire drawing and nail making to reflect the market price. See Prelim. Decision Memo at 14. Commerce also disregarded certain transactions between Pro–Team and its affiliated tollers because it determined that there was a difference between the market price and transfer prices for wire drawing and nail making services. Id. at 14. Commerce also preliminarily determined that PT and the rest of its tollers were unaffiliated. Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination—PT Enterprise Inc. at 2, CD 200, bar code 3248421–01 (Dec. 17, 2014). Commerce further found that PT did not have a viable comparison market, so it calculated a constructed value ("CV") as the basis for NV using the financial statements of PT affiliate Pro–Team. Prelim. Decision Memo at 16.

On May 13, 2015, Commerce issued its final determination. See Final Results , 80 Fed. Reg. at 28,959 and accompanying Issues and Decision Memorandum for the Affirmative Final Determination in the Less than Fair Value Investigation of Certain Steel Nails from Taiwan, Oct. 16, 2015, ECF No. 17 ("Final Decision Memo"). Commerce continued to use Pro–Team's financial statements to calculate CV. Final Decision Memo at 10–15. However, Commerce declined to allow subsidy income received by Pro–Team to offset Pro–Team's general and administrative expenses because Commerce concluded "the subsidy is not related to the general operations of the company as a whole, but instead appears directly related to and intended for the company's other steam line of business." Id. at 55. Commerce applied this subsidy income as an offset to Pro–Team's cost of goods sold instead. Id. Commerce also continued to disregard transactions between Pro–Team and certain affiliated tollers for wire drawing and nail making services, id. at 53, and continued to find Pro–Team unaffiliated with its other [[ ]] tollers. Id. at 50–53. Commerce determined that 42.27% of PT's U.S. sales had passed the Cohen's d test, id. at 19, and accordingly determined to apply the mixed methodology, by which Commerce applies the average-to-transaction ("A-to-T") method to PT's sales that passed the Cohen's d test and the A-to-A method to...